The Applicability of the United Nations Convention on Contracts for the International Sale of Goods to Rockets, Drones, and Other Space Vehicles

Nelson Edward Timken 

Mediator-Arbitrator | International Arbitration Enthusiast TimkenDisputeResolution.com

July 27, 2025

Executive Summary

This report examines the applicability of the United Nations Convention on Contracts for the International Sale of Goods (CISG) to contracts involving rockets, drones, and other space vehicles. It commences by defining the CISG and articulating its critical role in international commercial arbitration. The core of the analysis delves into the interpretation of “goods” and specific exclusions, particularly the “aircraft” exclusion under Article 2(e) CISG, in the context of these high-technology items. Drawing upon academic articles and legal commentary, the report analyzes the arguments for and against CISG applicability, highlighting the prevailing view that, despite initial drafting limitations, the Convention can and often should apply. A critical reliance on party autonomy to address the unique risks associated with these frontier technologies is also emphasized throughout the analysis.

I. The United Nations Convention on Contracts for the International Sale of Goods (CISG)

A. Definition, Purpose, and Scope of the CISG

The United Nations Convention on Contracts for the International Sale of Goods (CISG) stands as a pivotal multilateral treaty, providing a modern, uniform, and equitable legal framework for contracts concerning the international sale of goods.1 Adopted in Vienna in 1980, the CISG has garnered widespread acceptance, having been ratified by over 90 countries, thereby establishing itself as a cornerstone of global trade.3

The fundamental purpose of the CISG is to inject certainty into international commercial exchanges, significantly reducing transaction costs and dismantling legal impediments among Contracting States, thus fostering international trade.1 It meticulously balances the interests of both buyers and sellers and has even served as an inspiration for national contract law reforms in various jurisdictions.1

The Convention’s applicability is largely automatic. It governs contracts for the sale of goods between parties whose places of business are situated in different States, provided both States are Contracting States under Article 1(1)(a) CISG.2 Furthermore, the CISG can also apply if the rules of private international law dictate the application of the law of a Contracting State, as stipulated in Article 1(1)(b) CISG.2

The CISG is primarily designed for commercial goods and products, with specific exclusions enumerated in Article 2. These exclusions encompass goods acquired for personal, family, or household use, sales conducted by auction, and the sale of ships, aircraft, or intangible assets and services.2 The applicability of the CISG to computer software, however, remains a subject of considerable debate.2

A paramount principle embedded within the CISG is party autonomy, enshrined in Article 6. This provision empowers contracting parties to expressly exclude the Convention’s application or to derogate from or modify any of its stipulations.2 This inherent flexibility is of critical importance in navigating the complexities of international commercial transactions.

The interpretation of the CISG itself is guided by Article 7(1), which mandates consideration of its “international character,” the imperative for uniform application, and the observance of good faith in international trade.2 This interpretive directive is particularly vital for extending the Convention’s reach to evolving technologies and novel commercial scenarios not explicitly envisioned at its inception. The consistent emphasis on promoting uniform international trade and reducing uncertainty within the Convention leads to an interpretive stance that favors its application in ambiguous situations. This approach effectively transforms Article 7(1)’s call for uniform interpretation into an active inclination towards inclusion, thereby expanding the CISG’s potential reach to new commercial realities that were not explicitly foreseen by its drafters.1 This indicates that the Convention is designed to be adaptable and enduring, rather than rigidly confined to its 1980 context.

B. Significance of CISG in International Commercial Arbitration

The CISG stands as a landmark treaty that furnishes a uniform framework for international sales contracts, significantly streamlining dispute resolution processes.3 Its widespread adoption by over 90 countries solidifies its position as a “cornerstone of global trade”.3

The Convention provides a structured methodology for addressing disputes by delineating various remedies for breach of contract, including specific performance, repair or replacement of non-conforming goods, avoidance of the contract, and damages.3 These provisions establish a common legal ground, diminishing the necessity for parties to navigate intricate and often conflicting national laws.1

Crucially, the CISG explicitly permits and is compatible with diverse dispute resolution mechanisms, including arbitration, mediation, and litigation.3 This compatibility is particularly significant given that arbitration and mediation are widely favored in international commercial law due to their inherent flexibility, confidentiality, and often more expeditious resolution compared to traditional litigation.3 Consequently, many international sales contracts incorporate arbitration clauses, a practice that the CISG supports.3

By offering a default, uniform legal framework, the CISG substantially enhances the certainty and predictability of international sales contracts, obviating the need to resort to complex rules of private international law to ascertain the applicable law.1 This predictability offers a distinct advantage, especially for small and medium-sized enterprises (SMEs) and traders in developing countries who may have limited access to specialized legal counsel.1

While the CISG provides a broad and adaptable framework, its generality has inherent limitations when confronted with truly unique and high-risk environments. For instance, in the context of international sales in outer space, the CISG is currently considered sufficient as a legal regime, but only as a temporary measure.7 This suggests that while the CISG serves as an initial harmonizing force for new commercial frontiers, as these frontiers mature and their specific challenges—such as extreme environmental risks or novel liability issues—become more pronounced, the need for specialized law or highly customized contractual provisions intensifies. In such scenarios, the CISG’s role transitions from being the primary governing law to a foundational, default framework that parties can build upon or derogate from through specific contractual agreements.

II. Interpreting Goods and Exclusions under the CISG for Complex Items

A. General Principles for Defining Goods (Articles 3(1) and 3(2) CISG)

The CISG does not offer an affirmative definition of “goods” but instead enumerates transactions that fall outside its purview.8 This deliberate approach by the drafters acknowledged the inherent difficulty in crafting a static definition amidst an ever-evolving global trade landscape.8

Article 3(1) CISG specifically addresses contracts for the supply of goods that are to be manufactured or produced. Such contracts are generally deemed sales contracts unless the party ordering the goods undertakes to supply a “substantial part” of the materials necessary for their manufacture.14 In determining what constitutes a “substantial part,” the primary criterion employed is “economic value”.14 This involves a comparative assessment of the value of materials furnished by the buyer versus those provided by the seller. An “essential” criterion is only considered when the economic value assessment proves impossible or inappropriate under the circumstances.14 The term “substantial” is not quantified by predetermined percentages but is instead ascertained through an overall assessment of the transaction.14 The CISG Advisory Council (CISG-AC) Opinion No. 4 suggests that a fixed percentage, particularly below 50% of the material value, would likely be insufficient to exclude the Convention, thereby favoring its application.14 Significantly, the provision of labor or other services required for the

manufacture or production of the goods falls under Article 3(1) and is not governed by Article 3(2).14 This means that the work involved in creating the manufactured good is considered an integral part of the goods themselves for the purpose of this article.

Article 3(2) CISG governs “mixed contracts,” which encompass both goods and services. The Convention does not apply if the “preponderant part” of the obligations of the party furnishing the goods consists of the supply of labor or other services.9 Similar to Article 3(1), the “preponderant part” is primarily determined by an “economic value” criterion, assessed at the time the contract is concluded.14 Factors influencing this interpretation include the contract’s denomination, its entire content, the price structure, and the weight the parties assigned to different obligations.14 The CISG-AC Opinion No. 4 emphasizes that “preponderant” should not be quantified by predetermined percentages; for exclusion to apply, the value of services must be “truly preponderant”.14

The consistent reliance on an “economic value” criterion for both manufactured goods under Article 3(1) and mixed contracts under Article 3(2) signals a pragmatic, commercially oriented approach to determining CISG applicability.14 This emphasis on financial contribution or value proportion, rather than purely physical or qualitative assessments, makes the CISG highly adaptable to modern, complex transactions where goods often incorporate significant embedded services, such as design, engineering, software integration, or ongoing maintenance. This allows for a functional assessment of the contract’s primary purpose from a commercial perspective, ensuring the Convention remains relevant even as the nature of “goods” continues to evolve.

B. The Aircraft Exclusion (Article 2(e) CISG) and its Interpretation

Article 2(e) CISG explicitly excludes the sale of “ships, vessels, hovercraft or aircraft” from the Convention’s scope.2 This exclusion is particularly pertinent when considering the applicability of the CISG to modern high-technology items such as drones, rockets, and other space vehicles.

The primary challenge arises from the fact that the CISG was drafted in 1980, a period predating the widespread commercialization and significant technological advancements seen in many contemporary drones and space vehicles.19 Consequently, the term “aircraft” is not explicitly defined within the Convention, leading to diverse interpretations across jurisdictions.13

Legal commentary and academic discourse, particularly prominent in the context of the Vis Moot international arbitration competition, strongly advocate for an autonomous and restrictive interpretation of “aircraft” under the CISG, consistent with the principles set forth in Article 7(1).12 An autonomous interpretation means defining the term independently of varying national laws, which is crucial for ensuring uniformity of application across all Contracting States.12 A restrictive interpretation, conversely, aligns with the Convention’s general principle of favoring broad applicability.

Arguments against defining “aircraft” based solely on size or national registration requirements are widely accepted.15 The drafters of the CISG and its predecessor, the Uniform Law on the International Sale of Goods (ULIS), deliberately opted against these criteria due to concerns about inconsistency and legal uncertainty that would inevitably arise from disparate national laws.15

Instead, the “purpose” criterion is frequently highlighted as the decisive factor for defining “aircraft” under the CISG.15 Under this functional approach, an “aircraft” should be understood as a vehicle “permanently intended for transport in the air”.15 This functional interpretation allows for a more consistent application across diverse and rapidly evolving technologies.

The CISG’s 1980 drafting date created an interpretive gap regarding modern drones or space vehicles.19 This is particularly evident in the debate over whether drones qualify as “aircraft” under Article 2(e).13 A literal, static interpretation of “aircraft” would quickly render the CISG obsolete for new technologies. The emphasis on a “purpose” test for defining “aircraft” is a direct and necessary response to this challenge.15 This situation underscores a critical tension in international uniform law: how to maintain relevance in the face of rapid technological advancement. The legal community’s response, favoring a dynamic, purposive interpretation over strict literalism, demonstrates a commitment to the Convention’s overarching goal of facilitating trade, even if it requires stretching the original meaning of terms. This proactive interpretation ensures the CISG remains a living instrument, capable of adapting to unforeseen innovations.

III. Applicability of CISG to Rockets, Drones, and Other Space Vehicles: Analysis of Legal Commentary and Academic Discourse

A. Applicability to Drones

The question of CISG applicability to drones has been a significant topic in recent legal scholarship, given the rapid advancements and commercialization of this technology.

“Unveiling a New Curtain: The Applicability of CISG on Sales of Drones” by Chelsea Gracia (2022) 19

• Facts/Context: Drones have become an integral component of the aviation industry, encompassing a broad spectrum of sizes and functionalities. The CISG’s inception predates the widespread commercialization of drones, resulting in a lack of explicit provisions addressing their sale and, consequently, diverse interpretations regarding the Convention’s applicability. The author notes that national aviation laws frequently categorize drones as aircraft, subjecting their sales to a myriad of varying requirements and restrictions, which contributes to legal inconsistency.
• Issues: The paper examines the inherent challenges in reconciling the CISG’s existing provisions with the unique characteristics of drone technology, such as their remote operation and autonomous capabilities. It identifies that issues pertaining to liability for damages, warranties, and the seller’s obligations may require specific tailoring to accommodate the nature of drone transactions.
• Holding/Conclusion: Gracia concludes that extending the CISG’s application to the sale of drones is “conceivable” and, indeed, “crucial” for establishing clarity and consistency in international drone sales. The CISG, as an internationally recognized legal instrument, offers a “convenient framework” for parties engaged in drone transactions. The author underscores that implementing the CISG would substantially reduce uncertainties and legal complexities associated with cross-border drone transactions, thereby fostering international cooperation and innovation within the industry. This, it is argued, necessitates a “nuanced understanding” and “potential adaptation” of existing CISG provisions.
• Analysis: Gracia’s analysis aligns with the prevailing principle of favoring the Convention’s broad applicability. It advocates for the CISG’s extension to new technologies to fulfill its fundamental objective of establishing a uniform legal framework and promoting good faith in international trade. While acknowledging the complexities arising from drones’ unique characteristics and the potential for conflicting national regulations, the article asserts that the benefits of a harmonized legal approach under the CISG outweigh these challenges. This perspective highlights the Convention’s adaptability as a default framework, even if specific contractual tailoring remains a practical necessity.

Humboldt University Vis Moot Memorandum (2023) 15

• Facts/Context: This memorandum, prepared for the prestigious Willem C. Vis International Commercial Arbitration Moot, addresses a hypothetical Purchase and Supply Agreement (PSA) for drones between a seller (Claimant) located in Equatoriana and a buyer (Respondent) in Mediterraneo. Both fictional states are assumed to be Contracting States to the CISG. The drones in question are specifically designed and intended for the “collection of geological and geophysical data.” The Respondent in the hypothetical argues that the contract should be excluded from CISG coverage under Article 2(e) as a sale of “aircraft” and, alternatively, under Article 3(2) as a contract predominantly for services.
• Issues: The primary legal issues examined are: (1) whether the drones qualify as “aircraft” within the meaning of Article 2(e) CISG, (2) whether the “preponderant part” of the contract consists of services, thereby excluding it under Article 3(2) CISG, and (3) whether the choice-of-law clause, which stipulates governance by “the law of Equatoriana,” effectively excludes the CISG.
• Holding/Conclusion (Claimant’s Argument): The Humboldt University memorandum rigorously argues for the CISG’s applicability to the contract.

• Regarding Article 2(e), it contends that drones are not “aircraft” when interpreted autonomously and restrictively, with a strong emphasis on the “purpose” criterion. Since the drones’ explicit and intended use is data collection, and not the transport of goods or persons, they fall outside the scope of the “aircraft” exclusion. The memorandum dismisses size or national registration as appropriate defining criteria for “aircraft” under the CISG, citing concerns related to historical intent and the need for uniformity.
• Concerning Article 3(2), the memorandum asserts that the “preponderant part” of the PSA is the sale of goods (drones), rather than services (maintenance). An objective economic analysis presented in the argument demonstrates that the value of the drones (e.g., EUR 44 million) significantly outweighs that of the maintenance obligations (e.g., EUR 17.44 million). Subjectively, the contract’s title (“Purchase and Supply Agreement”) and the consistent designation of the parties as “Seller” and “Buyer” further corroborate its character as a sales transaction.
• Finally, the memorandum argues that the general choice-of-law clause, which refers to “the law of Equatoriana,” does not constitute a “clear and unmistakable intent” to exclude the CISG, particularly since Equatoriana is a Contracting State.

• Analysis: This hypothetical case serves as a compelling illustration of how key CISG interpretive principles are applied to novel technologies. The rigorous argument for a purposive interpretation of “aircraft,” grounded in Article 7(1) to ensure uniformity, is crucial for adapting the CISG to the evolving nature of drones. The application of the economic value test for mixed contracts provides a clear, objective framework for determining the contract’s primary nature. The memorandum effectively demonstrates how the principle of favoring the Convention’s application guides the interpretation of exclusions and choice-of-law clauses to ensure CISG applicability where commercially appropriate. The core of the drone applicability debate hinges on whether they are “aircraft” under Article 2(e). The Humboldt University memorandum strongly advocates for a “purpose” test, arguing that if a drone’s primary purpose is not transport, it should not be excluded.15 This approach extends beyond a literal reading of “aircraft” to consider the functional intent of the technology. This “purpose” test is a sophisticated interpretive mechanism that allows the CISG to remain technologically neutral. Instead of attempting to list every new invention, it provides a flexible standard that can be applied to future technologies not yet conceived. This ensures the Convention’s enduring relevance by focusing on the underlying commercial function rather than specific design or nomenclature, preventing its rapid obsolescence in dynamic sectors like aviation and space.

B. Applicability to Rockets and Other Space Vehicles

The commercialization of outer space presents unprecedented challenges for traditional commercial law, making the CISG’s applicability to rockets and other space vehicles a critical area of inquiry.

“CISG and the Final Frontier: Contracting for the International Sale of Goods That Originate From, Are Delivered In, or Transit Through Outer Space” by Michael Mineiro (2008) 7

• Facts/Context: This academic paper assesses the applicability of the CISG to contracts for the international sale of goods that originate from, are delivered in, or transit through outer space. It specifically considers the unique environmental and technical challenges inherent in outer space, particularly concerning the adequacy of the CISG’s default provisions on the risk of loss.
• Issues: Mineiro explores whether the CISG, initially conceived for terrestrial sales, can effectively govern contracts for goods situated in outer space, given the heightened risks (e.g., space debris, radiation, loss of transportation vessels) and the inherent ambiguity of exclusions like “ships, vessels, hovercraft or aircraft” when applied to spacecraft. The paper also questions the sufficiency of the CISG’s default risk of loss provisions (Articles 66-70) in this specialized context.
• Holding/Conclusion: Mineiro concludes that the CISG can apply to such contracts, provided the fundamental conditions for its applicability under Article 1 are met, “regardless of the geographic location of the goods”.7 The paper notes that Article 2(e) does not explicitly apply to spacecraft, although it acknowledges that interpreting “vessel” to encompass spacecraft with transport vehicle characteristics could lead to their exclusion. Crucially, Mineiro characterizes the CISG as currently “suffic[ing]” as the international legal regime for outer space sales, but only as a “stop-gap measure.” He posits that an international agreement specifically governing contracts for the sale of goods in outer space will “ultimately be necessary” due to the unparalleled challenges of transit, transfer, and storage in this environment.7
• Hypothetical Scenario: The paper presents a hypothetical case involving a U.S. space-widget company (S) selling 1,000 space-widgets, currently stored in an outer space cargo facility, to a Chinese mining company (B) for its asteroid operation. Both the United States and China are Contracting States to the CISG.
• Analysis of Hypothetical: Mineiro concludes that since both parties (S and B) have their places of business in different Contracting States, the conditions for CISG applicability under Article 1 are fulfilled, irrespective of the goods’ physical location in outer space.7 This demonstrates that the CISG’s sphere of application is not geographically confined to Earth.
• Analysis of Holding: Mineiro’s analysis underscores both the inherent flexibility and the ultimate limitations of the CISG. While the Convention’s general principles can be stretched to cover new domains, its default provisions, particularly those concerning the risk of loss, may not be adequately tailored for the extreme and novel risks of outer space. The characterization of the CISG as a “stop-gap” measure offers a significant perspective, suggesting that while the CISG provides a foundational layer of law, specialized industry agreements or highly customized contracts are essential for achieving long-term legal certainty in emerging high-risk sectors. Mineiro’s analysis explicitly states that while the CISG can apply to space goods as a “stop-gap,” a dedicated international agreement will eventually be needed.7 This highlights a fundamental tension: the CISG’s strength lies in its broad applicability and uniformity across diverse commercial transactions, but this generality means its default provisions might not adequately address the highly specialized and extreme risks—such as space debris, radiation, and unique delivery challenges—inherent in outer space operations. This implies that for truly nascent and high-risk industries, the CISG serves as a valuable initial framework, providing a baseline of legal certainty. However, as these industries mature and their unique operational and liability profiles become clearer, specialized law or highly detailed contractual customization becomes indispensable. The CISG’s role then evolves to one of a foundational, rather than comprehensive, legal regime.

Mineiro further points out the inadequacy of current Incoterms for outer space transactions and suggests the need for “Incospaceterms”.7 He also details how the CISG’s default risk of loss provisions (Articles 66-70) face significant challenges in outer space regarding the precise moment of “handing over,” the ability to ascertain “knowledge” of damage, and the burden of proof, particularly due to unmanned operations and the difficulty of assessing damage in such an environment.7 This directly correlates with the industry standard practice of using cross-waivers of liability.7 This reveals that for high-value, high-risk transactions in extreme environments, the default risk allocation mechanisms of a general commercial convention like the CISG are often insufficient. Parties in the space industry proactively manage risk through bespoke contractual provisions—such as highly detailed delivery terms and specific definitions of “handing over”—and industry-specific mechanisms like cross-waivers and mandatory insurance. This demonstrates how party autonomy (Article 6 CISG) is not merely a theoretical option but a practical necessity, allowing the market to develop tailored solutions where the general law is inadequate.

C. General Considerations for Space-Related Transactions under CISG

Several general considerations are paramount when applying the CISG to space-related transactions, highlighting the interplay between the Convention’s default rules and the unique demands of this frontier industry.

Party Autonomy (Article 6 CISG): Given the exceptional risks and complexities inherent in space-related transactions, the ability of parties to exclude or vary the application of the CISG, as permitted by Article 6, becomes critically important.7 This flexibility empowers businesses to meticulously tailor contracts to their specific needs, thereby mitigating risks that may not be fully addressed by the CISG’s default provisions.

Risk of Loss (Articles 66-70 CISG): While the CISG provides default rules for the passing of risk, Mineiro’s analysis highlights that these provisions (e.g., Article 67 for shipping contracts, Article 68 for goods in transit, Article 69 for buyer pickup) present significant challenges in the outer space environment.7 Factors such as the presence of space debris, radiation, and the potential loss of transportation vessels dramatically increase the risk of loss.7 Determining the precise moment of “handing over” or accurately assessing damage when storage and transport operations are unmanned can be exceptionally difficult, potentially placing substantial and unforeseen risks on the buyer.7 This necessitates the inclusion of highly detailed contractual provisions to clearly define these processes and allocate risk with greater precision.

INCOTERMS: Current Incoterms, which are designed for terrestrial trade, are not fully adapted to the unique characteristics of outer space operations. Mineiro suggests the development of “Incospaceterms” to clarify concepts such as loading, unloading, containerization, and delivery in outer space, which would serve to supplement the CISG in this specialized context.7

Cross-Waiver of Liability: Cross-waivers are an established industry standard in the space sector.7 These provisions, often mandated by national laws (e.g., the U.S. Commercial Space Launch Act), require reciprocal waivers of claims among parties involved in space activities. Their effect is contingent upon the specific contract structure and scope, fundamentally impacting risk allocation and insurance considerations, and frequently overriding or complementing the CISG’s default liability rules.7

Dispute Resolution: While domestic courts possess jurisdiction to hear space-related claims, international arbitration is frequently the preferred method for dispute resolution due to its inherent flexibility, confidentiality, and the ability to select arbitrators with specialized knowledge of the space industry.18 The CISG’s compatibility with arbitration 3 makes it a suitable legal framework for resolving disputes arising from international sales of space goods when arbitration is chosen. Furthermore, industry-specific arbitration rules, such as those of the Permanent Court of Arbitration for Outer Space Disputes, are specifically designed to cater to the unique characteristics of this sector.18

The detailed discussion of risk of loss, Incoterms, and cross-waivers reveals that while the CISG provides a default framework, parties in the space industry heavily rely on party autonomy (Article 6) to craft highly specific contractual terms.7 These terms often incorporate or are influenced by industry-specific norms and regulations, such as cross-waivers, which may supersede or significantly modify the CISG’s default provisions. This demonstrates that in highly specialized and evolving sectors, the CISG functions less as a rigid set of rules and more as a foundational, enabling framework. It sets a baseline, but the actual governing law for the transaction is often a complex interplay between the CISG, the parties’ bespoke agreements, and the unique customs and regulatory landscape of the specific industry. This highlights the practical limits of a general convention and the necessity of expert legal counsel in drafting such contracts.

IV. Conclusion

The analysis confirms that the United Nations Convention on Contracts for the International Sale of Goods (CISG) generally applies to contracts for the international sale of rockets, drones, and other space vehicles, provided the fundamental conditions of Article 1 are met. The Convention’s broad scope and its underlying principle of favoring broad applicability support its extension to these modern, high-technology goods, even though they were not explicitly contemplated at the time of its drafting.

The primary challenges to CISG applicability in this domain stem from the interpretation of its exclusions, particularly whether drones or certain space vehicles fall under the “aircraft” exclusion of Article 2(e), and whether contracts are predominantly for services under Article 3(2). Academic discourse and legal commentary, as exemplified by the works of Gracia and the arguments presented in the Humboldt University Vis Moot memorandum, largely advocate for a purposive, autonomous, and restrictive interpretation of these exclusions. This interpretive approach emphasizes the commercial function of the items rather than a literal or static definition, allowing the CISG to remain relevant and adaptable to ongoing technological advancements.

While the CISG provides a valuable and uniform legal framework, its default provisions, especially concerning the passing of risk, may not fully address the unique and heightened risks inherent in outer space operations. Consequently, the principle of party autonomy, as enshrined in Article 6 CISG, becomes critically important. Parties engaging in these transactions must proactively tailor their contracts with highly specific clauses, often incorporating industry-specific mechanisms like cross-waivers of liability and considering specialized trade terms (e.g., “Incospaceterms”) to precisely allocate risks and obligations.

In conclusion, the CISG serves as an essential foundational legal instrument for international sales in the burgeoning space and drone industries. However, its role is often that of a “stop-gap measure,” necessitating comprehensive contractual customization and, ultimately, the potential development of more specialized international agreements to fully address the intricate and evolving legal landscape of these frontier commercial activities.

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